WHEN IT COMES TO CONFLICTS, PERCEPTION IS REALITY

I recently joined a nonprofit board in the city, and the first thing I noticed was that the board of directors didn't have a disclosure agreement for its members. Typically, those are documents you sign that ask you to disclose whether you or a company in which you have a financial interest is doing business with the organization and, if so, what kind. The idea is to let everyone know just what's going on and with whom.

If you ever want to get in trouble these days, all you have to do is have someone dig up the fact that you own a piece of this or that and didn't tell everyone.

I have had a longstanding policy to never own personally any automotive stocks because we publish Automotive News.

Last week, my broker asked me whether I realized that I owned some Daimler-Benz stock, which had been purchased by a money manager in my name. I hadn't realized I owned it. I told him to sell it and to make sure we don't own any stock in automotive companies based outside the United States, as well as those based here. You simply never know.

This has been my personal practice. Yet I was amazed last week when someone asked me, very seriously, how many millions I made on my Chrysler stock. At first they were surprised, and then they understood why I can't own any of those stocks. It's simply a conflict of interest.

But in today's world, obvious conflicts of interest are being replaced by concerns that are just as important but far more subtle. I'm talking about the perception of conflict. It doesn't matter anymore whether there is a conflict of interest in some ownership or participation. What is important is whether there appears to be a conflict. In a world of 15-second sound bites on television, millions of people come to conclusions quickly about what appears to be.

It may not be ideal. But it is today's world, and appearances now seem to be just as important as reality.

I don't think anyone has gotten into much trouble by disclosing too much. Better that than have someone dig up a potential conflict later on. Disclosure is safer than omitting something these days.

Conflicts of interest won't go away. But a simple solution sometimes may involve announcing any potential conflicts first. It's still tricky, and it always will be.